Family fortunes

29 January, 2010

Page 19

McDonalds Bakers of Glasgow took a tentative step in a new direction during the 1990s and has never looked back. A traditional family baking business, with 10 conventional retail outlets, the company had made an abortive and almost business-ending attempt to diversify into wholesale during the previous decade. And since it was "getting harder and harder for traditional bakers' shops", according to its MD, the decision was taken to develop a coffee shop and takeaway offering.

The company bought a unit in Glasgow's Savoy shopping centre and added a few seats to form a sit-in area. Initially, this was envisaged as "a sideline", recalls current managing director Joseph McDonald. But the move soon began to pay dividends, so a further coffee shop/takeaway was added at the nearby Govan Centre. McDonalds now operates six such units three in the centre of Glasgow and one each in Govan, Clydebank and Paisley. It has just doubled the size of the Savoy Centre outlet to seat 60 people and, last November, it spent around £1m on a coffee shop-takeaway in Union Street, central Glasgow, which is attracting a more cosmopolitan clientele because of its proximity to the city's main train station.

The management team acknowledges that spending a seven-figure sum on a single outlet has had a heavy impact on a business that turns over around £2m per annum. But according to company chairman Joe McDonald, father of Joseph, sales are on a decidedly "rising trend" and confidence in the coffee shop-takeaway template is such that a mezzanine floor is to be added at its Trongate outlet, managed by Joe's son Martin, to provide space for more tables.

In the aftermath of such high-level expenditure, the family recognises that a period of consolidation is now required, although it also acknowledges that it would consider further purchases in the medium term if suitable opportunities arose. But Joe is adamant that the company will not chase turnover for its own sake. "A lot of people like to say 'I've got this turnover', but they've got no money left over," he says.

And there speaks the voice of many decades' experience: a past president of the Scottish Association of Master Bakers, Joe McDonald left school on a Friday afternoon in 1948 and began work on that same day's night shift at the bakery in Kirkintilloch, managed by his brother. Joe formed a Dainty Cakes joint venture in the same town in 1963, before setting up his own shop in the east end of Glasgow in 1966. The business was then moved to its current site in Drumoyne Road in 1980. Operations at the bakery have also undergone major changes in recent years: gone are the Saturday mornings spent pinning pastries, now that a Rondo cutting line has been introduced; and the installation of substantial bulk freezer capacity is enabling the company to make more products at one time and freeze them ready for bake-off in the outlets.

At the same time, the firm has whittled down its product range to "the most popular items": for example, a selection of more than a dozen types of scone has been honed down to oven plain, oven sultana and potato. "It's less complicated for customers," notes production manager Paul McDonald. Other advantages include the fact that the full range is now easier to display on shop counters, and that van numbers have been reduced from six to just one.

The company's top sellers are hot rolls, savouries, pastries and doughnuts, with the most profitable being Scotch pies and sausage rolls. It also makes a sizeable range of confectionery and is planning to introduce cupcakes in the near future. But for a company that has seen so much change in recent years, it is comforting to know that some old favourites empire biscuits, pineapple cakes and fern cakes among them continue to tempt the customers' taste buds. "These lines have been popular since time immemorial," notes Joe.